Enterprise

Four strategies start-ups can employ for success

staying ahead

Start-ups need good plans to survive the pitfalls that many new businesses encounter. PHOTO | FILE |

Business is all about competition. You must compete for the shilling that is in the pocket of your prospect or customer with other contesting parties.

You must market yourself as the best option and preferred choice of many. Several marketing strategies have been employed with varying degrees of success but when all are distilled, we get four key tips that guarantee success if used well.

The first and most important secret of success is to create a product that has tangible utility and usefulness for your customers. Create utility products that help customers to solve a specific need. This calls for doing marketing research before production so that when you eventually hit the market, your role is reduced to promotions and distribution rather than begging people to buy.

Secondly, in today’s competitive market with lots of substitute products, pricing is key. Many entrepreneurs make excellent products but get it wrong on pricing.

The fact that you want to recoup your investment fast, repay loans, lead a certain lifestyle and so on, should not be the basis of pricing.

Set a price that the majority of customers and prospects are happy with. Of course you would like to sell at the best price possible and the customer would like to buy at the least price. As the two of you try to strike a consensus, a competitor who sells similar or substitute products comes into the scene whose activities must be factored in.

Bring your products into the price range of your customers even if it means getting very thin margins initially. The overall effect could be opening up new markets and eventually increasing profit margins due to economies of scale.

Numbers play a critical role in success or failure. Many start ups have experienced astronomical growth and achieved market leadership within a relatively short time by having affordable prices rather than aiming at fat margins. The bigger the market share, the lower the cost of production, marketing, distribution, product development and everything else.

Thirdly, use benefit as a selling point. Each product offers one or several key benefits that are the primary reason why customers buy. A product also elicits a key fear which is what stops prospects from buying.

Take, for example, buying a car. Most people buy certain models because they are prestigious, strong and elegant. At the same time, when the same models are mentioned other people think of high maintenance costs and lack of readily available or cheap spare parts. This elicits fear and is the key reason why they would rather not buy.

Customers naturally fear paying too much, buying the wrong product, losing their money or getting stuck with a product that does not meet their expectations. This is why you must emphasise a product’s key benefits to dispel this fear.

Finally, give your customers what they perceive as value for their money. People buy products due to their value and not price. Therefore, though within the affordability range, the emphasis should be on value and not price.

Find out what your customers value most. It could be prestige, reliability, appreciation, privacy or exclusivity. Give it to them and they will readily part with the shillings in their wallets.

Mr Kiunga is the author of The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market. [email protected]